What We Can Learn from Singapore

Townhall.com ^ | September 21, 2013 | John C. Goodman

[Kaslin]

In 1984, Singapore instituted a revolutionary idea: a system of compulsory saving for medical expenses. That was the same year my colleagues and I at the National Center for Policy Analysis introduced the idea of Health Savings Accounts in this country.

After almost three decades, Singapore has now come to the attention of a lot others, including a book by Brookings, and a whole slew of posts by bloggers.

At the risk of disappointing you, Singapore does not have a free market for health care. What it does have is an alternative to the European/American welfare state, in which private saving and private insurance do what employers and governments do in other countries. The Singapore philosophy is:

• Each generation should pay its own way.

• Each family should pay its own way.

• Each individual should pay his own way.

• Only after passing through these three filters, should anyone turn to the government for help.

If the United States adopted a similar approach to public policy, there would be no deficit problem in this country.

How the system works. In Singapore, people are required to save for health care, retirement income and other needs. They can use their forced saving to purchase a home, pay education expenses, and purchase life insurance and disability insurance. For individuals up to age 50, the required saving rate is 36% of income (nominally divided: 20% from the employee and 16% from the employer). Of this amount, 7 percentage points is for health care and is deposited into a Medisave account. Individuals are also automatically enrolled in catastrophic health insurance, although they can opt out.

Self-insurance. A controversial issue both in the United States and in Singapore is: can individuals be counted on to manage some of their own health care dollars in a responsible way or does health care work better if all the dollars are controlled by insurance companies, employers or the government? After three decades of experience, Singapore has shown the world that individual self-insurance works and it works well.

Incentives to control spending.There has been some argument about whether Medisave accounts have reduced overall health care spending in Singapore. On the one hand, anytime you force people to save for a consumption item and the savings rate for a lot of them is higher than what they were previously spending, total spending is going to go up. But, money in the accounts belongs to the account holder and anything not spent in the current period rolls over and is available for future spending. So, compared to taxing people and giving the revenue to insurance companies to pay for first-dollar coverage, spending in Singapore is definitely lower than it would have been.

A shift from the public to the private sector.The most important thing Singapore has accomplished in health care (in contrast to all the other developed countries) is an enormous shift of money and power from the government to the private sector. Since 1984, the Singaporean government's share of the nation's total health care expenditure dropped from about 50% to 20%. When you stop to think about it, that's incredible.

A different approach to social welfare. The most important feature of Singapore's overall approach to social welfare is that the country has found a rational way to provide services that are provided by ill-conceived social insurance programs in the rest of the developed world. As is well known, programs for the elderly have devolved into little more than legalized Ponzi schemes in the United States and throughout Europe. Governments everywhere have made promises of benefits they were unwilling to fund. So now they must either default on those promises or impose draconian taxes on the productive sector. Singapore has avoided that problem.

[bert]

if America was Singapore, Lois Lerner would have already been tried and put to death for crimes against the Republic

[VRW Conspirator]

In 1984, Singapore instituted a revolutionary idea: a system of compulsory saving for medical expenses.

And when the economy of Singapore collapses because of all the other economies collapsing, the government of Singapore will loot those savings. /dark cynicism off

[unixfox]

Hell, 90% of Congress would have been tried and put to death for crimes against the Republic.

[Kaslin]

indeed

[left that other site]

Here, vandals are called “Graffiti Artists” and are rewarded with Federal Grants.

In Singapore, they are CANED. That is, beaten with a stick.

[exDemMom]

It sounds better than what we have, but it still seems coercive.

However, I am completely convinced that the government’s empty promises with regard to retirement have done a lot of harm. People believing the promises do not save for retirement. Then, when they retire, they learn that social security provides just enough for them to live in tiny 2 room apartments in senior living facilities, eating dog food. And then they keep voting for Democrats because they’re so terrified that the little bit they receive will be taken away if they vote for Republicans.

Healthcare has its own set of government caused problems.

We definitely need to fix things. I am not convinced that strong-arming people the way Singapore does is the answer.

[M. Dodge Thomas]

The authors don’t bother to mention that two key features of Singapore’s system are (1) individual and family mandates and (2) a high degree of direct government intervention into health-care pricing:

“Singapore has a non-modified universal healthcare system where the government ensures affordability of healthcare within the public health system, largely through a system of compulsory savings, subsidies and price controls. Singapore’s system uses a combination of compulsory savings from payroll deductions to provide subsidies within a nationalized health insurance plan known as Medisave.”

http://en.wikipedia.org/wiki/Healthcare_in_Singapore

But then, *any* rational system has “mandates”, otherwise you have (as currently in the US) lots of uninsured “free-riders” on everyone else’s charity and tax dollars.

[kearnyirish2]

“But then, *any* rational system has “mandates”, otherwise you have (as currently in the US) lots of uninsured “free-riders” on everyone else’s charity and tax dollars.”

That’s right; none of these solutions that presumes a work ethic have a chance in the US (even at the ballot box). We have multiple generations at this point that have never been issued a W-2 or 1099, and they and their bastard offspring have no intention of starting now. Any measure that attempts to curb their bennies are driven by the fact that “American-Americans” have learned the tricks and they’ve “walked off the job” as well...